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Japan Tobacco (JT) has entered into a basic agreement with Suntory Beverage and Food (SBF) to sell its beverage vending machine business for $1.2bn.

The sale will include JT’s vending machine operation businesses, Japan Beverage and JT A-Star along with its Roots canned coffee and Momono Tennen-sui flavoured water brands.

JT had announced in February that it intends to withdraw from the manufacture and sale of beverage products.

With the sale, JT’s net profit is expected to increase by JPY100bn for the year ending December. However, the company said it is still working on the earnings estimate for the year.

With JT’s 260,000 drinks machines that are operated by its two units, SBF will now operate around 750,000 vending machines.

SBF president Nobuhiro Torii was quoted by Reuters as saying: "We want to be the No.1 beverage maker in 2020 and we know it won’t be easy.

"We have got a strong partner to achieve this goal."

SBF expects to conclude the purchase in July, subject to regulatory approval.

JT entered the beverage business in 1988, and is considered to be the 10th largest soft-drinks maker with around 1.6% in Japanese market.

Image: Japan Tobacco’s net profit is expected to increase by JPY100bn due to the sale. Photo: courtesy of tiverylucky / FreeDigitalPhotos.net.